Key investment points
Carbon market tracking: China: from April 6 to April 8, the trading volume of the listing agreement of the national carbon market carbon emission quota (CEA) was 5039 tons, a decrease of 92.76% on a weekly basis. On April 8, 2022, the transaction of carbon emission quota (CEA) in the national carbon market was 789 tons, with the opening price of 59.00 yuan / ton and the closing price of 59.99 yuan / ton. The closing price increased by 1.68% compared with the previous day and 2.55% on a weekly basis. From March 28 to April 1, the total trading volume of carbon emission quotas in eight pilot cities in China was 744100 tons, with a week-on-week increase of + 165.73%; The average transaction price of quota was 22.83 yuan / ton, with a week-on-week ratio of – 55.70%; The trading volume of CCER was 209300 tons, with a week on week ratio of + 66.64%.
EU: from April 4 to April 8, the trading volume of EU carbon emission quota futures totaled 116 million tons, a year-on-year increase of 1.32%. The weekly change value decreased by 56.881 million tons, with a week-on-week decrease of – 32.93%; The average transaction price was 78.55 euros / ton, with a year-on-year increase of + 80.82%. The weekly change value decreased by 0.37 euros / ton, with a week-on-week decrease of -0.47%.
Portfolio this week: Zhejiang Weiming Environment Protection Co.Ltd(603568) + Beijing Geoenviron Engineering & Technology Inc(603588) + Shanghai Sheng Jian Environment Technology Co.Ltd(603324) + Shengyuan Environmental Protection Co.Ltd(300867) + Jiangxi Hongcheng Environment Co.Ltd(600461) + current market (4.06-4.08): Shanghai Composite Index fell 0.94%, Shenzhen Component Index fell 2.20% and gem index fell 3.64%. The A-share environmental protection sector index fell 1.59%, and the rise and fall of solid waste treatment, sanitation, environmental monitoring, water affairs and water treatment were – 1.67%, – 1.34%, – 5.50% and – 1.19% respectively. Environmental protection stocks rose 54.0%. At present, the TTM valuation of A-share environmental protection sector is 17 times.
Industry highlights: the people’s Government of Jiangsu Province has issued the implementation opinions on deepening the battle of pollution prevention and control. The main guiding objectives are that by 2025, the ecological environment quality of the province will continue to improve, the total emission of major pollutants will continue to decline, the safe use of key construction land will be effectively guaranteed, and the carbon dioxide emission per unit of GDP will complete the objectives and tasks assigned by the state, The treatment capacity of solid waste and new pollutants has been significantly enhanced, the ecological environment risk prevention and control system has been more complete, the ecological environment treatment system and treatment capacity have been significantly improved, and new progress has been made in the construction of ecological civilization. By 2035, carbon emissions will be stable and decline after reaching the peak, the ecological environment will be fundamentally improved, the modernization of ecological environment governance system and governance capacity will be basically realized, and a beautiful China demonstration province will be built.
Investment suggestions:
Environmental protection enterprises outline the second growth curve. High quality environmental protection enterprises have the advantages of good cash flow and fine management. After the main business has entered a relatively mature stage, they begin to look for the second growth curve, such as Zhejiang Weiming Environment Protection Co.Ltd(603568) joining hands with Qingshan group to invest in Indonesia’s high matte nickel project, Shengyuan Environmental Protection Co.Ltd(300867) joining hands with China Three Gorges Renewables (Group) Co.Ltd(600905) to jointly develop offshore wind power in Fujian, which is expected to create the second growth pole for the company’s performance. It is suggested to pay attention to Zhejiang Weiming Environment Protection Co.Ltd(603568) , Shengyuan Environmental Protection Co.Ltd(300867) .
Focus on steady operation environmental protection enterprises and high dividend assets. Operational environmental protection has two characteristics: rigid demand in weak economic cycle and stable return under franchise mode. At present, the leading companies can contribute to the performance growth in the next 2-3 years on the one hand, and are expected to increase the profit space through fine management on the other hand. At the same time, under the background of “stable growth”, the investment value of high dividend assets is expected to be revalued. It is suggested to pay attention to Beijing Geoenviron Engineering & Technology Inc(603588) , Jiangxi Hongcheng Environment Co.Ltd(600461) .
Pay attention to the development opportunities in the field of high prosperity and subdivided environmental protection. Environmental protection subdivisions, such as waste gas treatment in the pan semiconductor field and biodiesel, are boosted by the investment acceleration or recycling trend of relevant industries. It is suggested to pay attention to the relevant high-quality targets in the high boom subdivisions of environmental protection. It is suggested to pay attention to Shanghai Sheng Jian Environment Technology Co.Ltd(603324) .
Risk tips: the implementation risk of environmental protection policies and the progress risk of construction projects.
